Friday the S&P 500 as well as ACWX (global equity ETF ex US stocks) closed above resistance and made higher highs.

Not surprisingly, as US and global equities have avoided a bear market (for the time being), precious metals have weakened. It's not a surprise that as Gold failed to breakout both the S&P 500 and global equities (ACWX) held their 200-day moving averages and then made a higher high.

S&P 500, Global Equities & Gold

The very recent underperformance in Gold and precious metals is better illustrated in the ratio charts below.

Gold against stocks made a very strong move in the fourth quarter but instead of digesting or consolidating that move, the ratios have steadily declined. The same could be said for the GDX ratios as they have formed rounding tops.

Gold & Gold Stocks vs. US & Global Equities

The implication is obviously not favorable for precious metals because outperformance of the stock market is a necessity for a bull market and especially so, given the current context.

That being said, one positive for the precious metals complex is the miners are outperforming the metals. Last week the GDX to Gold ratio hit a seven and a half month high.

Another positive is breadth has not deteriorated yet. The GDX advance decline line is only a tiny bit off the recent high and 73% of the HUI and 65% of GDXJ are above the 200-day moving averages.

Ultimately and to continue to beat the dead horse, a bull market in precious metals cannot begin without outperformance against the stock market. That will likely coincide with the Fed moving from pause mode to rate cuts.

The immediate outlook is bullish for stocks and therefore do not expect Gold to breakout or begin a bull market. It's unclear if renewed stock market strength will lead to a larger topping pattern or if its an indication that growth will stabilize for the rest of 2019. Regardless, until Gold outperforms stocks and the Fed is ready to cut, we are focused on the companies that can perform without a rising Gold price.